Developers say house prices down 26pc since the peak

The President of the developers’ association (pictured) also says there is no room for further falls, but he’s been saying that for a while.

How would you describe the flop in property prices that has taken place since Spain’s housing bubble burst? A disaster? Long overdue? Unfinished business? Well, according to José Manuel Galindo, President fo the APCE builders and developers association, the fall has been “significant”. Can’t argue with that. Prices are now down a total of 26pc in real terms since their peak, says Galindo, taking into account inflation and a reduction in VAT.

When it comes to holiday-homes on the coast, however, the falls have been more brutal. Prices on the coast have fallen by 32pc, according to Tinsa, and anecdotal evidence suggests it might even be higher than that. Galindo stressed that many developers cannot afford to reduce prices any further. “Developers can’t sell below the cost of their mortgage, because they no longer have the money to afford the adjustment,” he explained. I ask myself, what does that mean? That prices won’t fall further? That’s a non-sequitur. In the long-run, price will fall to affordable levels, regardless of how much builders or banks have to lose in the process. Are we there yet? Probably not.

Turning to the collapse in sales (down 40pc in August alone) Galindo blamed it on the lack of credit and local “purchasing capacity” and pinned his hopes on foreign buyers heping Spain mop up its glut of close to 300,000 unsold new homes on the coast. He also described the recent Government-led road-show to promote Spanish property around Europe “rather ineffective”.